It's that time of year again. Cheap gluhwein stalls, sellers of elaborate candles and stands displaying expensive wooden toys are pulling down their awnings all over Germany. The Christmas market season is about to kick off. If you're full to the brim of bratwurst and can't take any more hand-made Christmas cards, do something different this year. Take inspiration from the wooden toys and take yourself off to the place that they come from, Erzgebirge, a range of mountains that runs along the Saxon border with Bohemia.

The name Erzgebirge means "Ore Mountains", after the rich deposits of silver and other minerals that were discovered here in the Middle Ages. When the ore began to run out, the locals seized upon another natural resource, the thick forests that covered the mountains, and started to turn the trees into toys. By the 18th century, Erzgebirge had become the greatest centre of wooden toy manufacture in Europe, and the popularity of German-style Christmases in the Victorian era only increased demand. Then came the heavy toll of communism.

Today, though, the region is beginning to thrive again. The Saxon Tourist Board is doing sterling work promoting a Silberstrasse (Silver Street) that threads its way through a succession of small, attractive towns. The shop windows are stuffed with Christmas cribs and pyramids, nutcrackers and candelabra, made by different families of craftsmen.

Not that the earlier traditions have been forgotten. At one time the area's precious metals and semi-precious stones supplied the Electors of Saxony with much of their wealth and power, and the mountains were tunnelled through like Swiss cheese as the valleys echoed to the sound of hammering iron and copper. In commemoration, the local mining fraternities run elaborate parades in July and in the run-up to Christmas. The men wear uniforms and special hats (differing according to town and skill).

In Erzgebirge it is easy to see the unlikely connection between mining and toy-making. In the museum at Schneeberg, we found a wonderful collection of toy figures alongside mechanical models of a mine. Press a button and they clank away: wheels turn, horses circle, hammers clatter and pulleys draw the ore up to the top. One huge piece has a ghost that appears when the doors to a tunnel fly open. In another telling construction, banners at the head of the shaft rally the workers proclaiming: "Die Volker werden richtig entscheiden" (the people will make the right decision) under a US soldier clutching a bomb and a Soviet soldier a building, and "Die Freundschaft zur Sowjet-Union ist Herzenssache aller Deutschen" (Friendship with the Soviet Union is the dearest cause for all Germans).

Annaberg is the region's most picturesque town, cuddled beneath its great mother hen of a church - dedicated to St Anne. The church's interior bears witness to past civic wealth with vaulting that is a cat's cradle of elegant complexity and a stone font by Hans Witten, one of the master sculptors of the German Renaissance. Surrounded by cherubs, the font swirls up in sharply faceted segments as if turned out of a Victorian jelly mould.

The mining motif is never far away. The figure of a miner in protective turban, hooded shirt and knee-pads hacks the "rock" at the foot of the pulpit carved by Franz Maidburg in 1516, while behind one of the side altars there is a comprehensive tableau of the mining world, painted by Hans Hesse in 1521. And, in the museum next to the church, we ventured down a defunct silver mine in a group, kitted out in blue waterproof capes and yellow hard hats. Led by a cheerful ex-miner, we descended into the earth and along dripping corridors lit at intervals to show the seams of magnesium, silver and cobalt.

Under the dynamic Saxon leader, Kurt Biedenkopf, the larger cities on the northern edge of the Erzgebirge hover uneasily between the old and the new. Zwickau, at western end of the Silberstrasse loop, manufactured Audi cars before the war, then produced the GDR's people's car, the Trabant, and now has a vast Volkswagen factory on its outskirts. Georgius Agricola, author of the first great mining treatise, De Re Metallica, was Burgermeister of Chemnitz four times before he died here in 1555, a fact recorded on a graffiti-framed bronze plaque in the centre.

It is hard to feel much sense of place here, amid the massive building sites and forest of cranes that currently constitute the downtown zone. But halfway between the city and Dresden, the Saxon state capital, lies the more alluring town of Freiberg. Named after a 12th-century Imperial decree, allowing anyone to come to the area to prospect for minerals and to keep the proceedings, in 1765 a Bergakademie was founded in the city. Reputed to be the world's first college of mining and metallurgical study, it is still training mining engineers today.

Freiberg Cathedral pays lavish tribute to God with two great pulpits. The earlier and more astonishing is a Hans Witten masterpiece, known popularly as the tulip pulpit. It comprises a giant flower, signifying the Church as the garden of God. Resting at the foot is the figure of a miner in the guise of Daniel in the lions' den (a mine). Further in, the black tomb of Agricola's friend, the Elector Moritz of Saxony, is as a reminder of the chief beneficiaries of mining spoils.

Moritz and his successors turned Dresden into a great baroque city, and it is there that the spoils of Erz-gebirge receive their apotheosis. The Green Vault, the state treasury of Saxony, was once the most extensive collection of jewels in Europe and, naturally, figures of miners abound.

But Erzgebirge's greatest legacy perhaps lies in the porcelain collection of the pleasure palace of the Zwinger. For Saxon mining and foundry technology lay behind experiments that resulted (by 1710) in the production of the first European porcelain. Appropriately, amid the collections of 18th- century Meissen are elegant little figures of miners, in effect, merely upmarket rococo versions of the stiff wooden toys that decorate our Christmas trees today.

For more information, contact the German National Tourist Office, PO Box 2695, London W1A 3TN (0171-317 0908)